PBOC fixes USD/CNY reference rate at 6.7195, compared with 6.7192 previously

At 6.7195, Thursday’s USD/CNY central rate for the forthcoming trading session has been set by the People’s Bank of China (PBOC), against the previous day’s fixing of 6.7192 and a Reuters estimate of 6.6756.

PBOC: Frequently Asked Questions Answered

The People's Bank of China pursues stability and growth

Safeguarding price stability, including exchange rate stability, and supporting economic growth are the principal monetary policy objectives of the People's Bank of China (PBoC). Alongside these goals, China’s central bank seeks to carry out financial reforms, including opening up and developing the financial market.

The PBoC operates under state ownership

As an institution owned by the state of the People's Republic of China (PRC), the PBoC is not regarded as autonomous. Rather than the governor, it is the Chinese Communist Party (CCP) Committee Secretary, nominated by the Chairman of the State Council, who has a key influence over the bank’s management and direction. Both positions, however, are currently held by Mr Pan Gongsheng.

The PBoC uses a broad range of policy tools

To meet its objectives, the PBoC employs a wider range of monetary policy instruments than those used in Western economies. Its main instruments comprise a seven-day Reverse Repo Rate (RRR), the Medium-term Lending Facility (MLF), foreign exchange intervention and the Reserve Requirement Ratio (RRR). China’s benchmark interest rate, however, is the Loan Prime Rate (LPR). Adjustments to the LPR directly affect market borrowing costs for loans and mortgages, as well as the interest paid on savings. Altering the LPR also enables China’s central bank to influence the exchange rates of the Chinese Renminbi.

Private banks form a small part of China’s financial system

Private banks are permitted in China, where 19 such institutions account for a small fraction of the financial system. According to The Straits Times, the largest are digital lenders WeBank and MYbank, backed by technology giants Tencent and Ant Group. Domestic lenders funded entirely by private capital were allowed to enter China’s state-dominated financial sector in 2014.

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